Treasury Inspector General for Tax Administration
October 11, 2011
TIGTA - 2011-65
Contact: Karen Kraushaar
WASHINGTON – The Internal Revenue Service (IRS) needs to improve oversight over its employees’ use of credit cards for small purchases to ensure that all such uses are proper, a new report concludes.
Like other Federal agencies, the IRS provides credit cards to certain IRS employees for purchases of less than $3,000. These purchase cards are used for items such as office supplies, training, and other low-cost items. IRS employees are provided separate credit cards to use for travel.
From September 1, 2007, through March 31, 2009, the IRS’s 4,270 purchase card holders made more than 174,000 purchases totaling more than $80 million using purchase cards.
The Treasury Inspector General for Tax Administration (TIGTA) reviewed the IRS’s purchase card program and found numerous instances in which cardholders made purchases without necessary approvals and verification of funding; 2,955 purchases that were potentially split into two or more transactions to circumvent micro-purchase limits; and purchases made from improper sources.
The Federal Acquisition Regulation (FAR) prohibits splitting high-cost procurements into multiple credit card purchases and requires, whenever possible, the use of existing contracts. Cardholders are also required to seek approval for purchases and verify that funding is available prior to using the credit cards.
“The IRS must develop the controls necessary to ensure that improper and abusive purchases do not occur, that any such transactions are promptly detected, and that appropriate corrective actions are taken,” said J. Russell George, Treasury Inspector General for Tax Administration.
TIGTA made a series of recommendations to the IRS, including reinforcement to cardholders that split-purchase transactions will not be tolerated, improving its oversight of purchases, and developing and implementing guidance for determining an appropriate span of control for approving officials.IRS officials agreed with TIGTA’s recommendations, stating that they have changed their reviews of split-purchase transactions and expanded oversight reviews to include the use of contract vendors and preferred sources. IRS officials plan to provide guidance on oversight and enforcement responsibilities; develop examples and scenarios that constitute a split purchase; review the potential split purchases TIGTA identified; and review and develop a policy concerning the current span of control on purchase cards.
Read the report.
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